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There's still hope at Sparrows Point

Our view: It may be a long shot, but government and union officials are right to fight to find a new buyer who intends to make steel at the historic Baltimore County mill

8:00 a.m. EDT, August 13, 2012

The prospects for steelmaking at Sparrows Point look bleaker than ever. The mill was auctioned off last week for a paltry $72 million as part of owner RG Steel’s bankruptcy two a joint venture of two companies that do not make steel. Instead, the primary business of one of the firms involved, Hilco Trading LLC, is buying distressed industrial assets and selling them off for parts. There is now a very real possibility that the plant that made steel for the Golden Gate Bridge and the ships that won World War II — and, perhaps most pertinently, provided an entree into the middle class for tens of thousands of Baltimore families — will be razed to the ground.

But that possibility is not a certainty, and elected officials and mill workers are right to fight it as long as they can. Even in an era when U.S. steelmaking is at a disadvantage to foreign competitors in countries that don’t always play by the rules of fair trade, Sparrows Point and its workforce have value that would be wasted if Hilco sells the plant for parts. The plant is relatively modern and has rare access to a deep water port. The right purchaser — a vertically integrated operation that would be less susceptible to spikes in raw materials costs — could make a profit on operations there.

Moreover, there is nothing that could replace the steel mill on that property any time soon that would have anywhere near the economic impact or provide anything like the same quality of employment. The mill doesn’t employ 30,000 people like in its heyday, but until its recent shutdown, it did still provide jobs for 2,000 people — 1,700 union workers and 300 managers. Thousands of other jobs in related industries are also attributable to steelmaking there. And the jobs are good ones. The union workers, who need have no more than a high school diploma but who receive extensive on-the-job training, can earn $100,000 a year or more if they are willing to work enough overtime. They also get good health care benefits and pensions. Although many of them have skills that are transferable to other industries — the plant employs welders, electrical workers, plate fitters, and heating and air conditioning specialists — they would be hard pressed to find employment of that caliber elsewhere.

Baltimore County officials recently organized the Sparrows Point Partnership, a work group to find ways to develop the sizable piece of land on the Sparrows Point peninsula outside of the mill, and they believe it has great potential as a home for port-related activities, and perhaps even an expansion of the port itself once Baltimore starts benefiting from is compatibility with the new super-sized ships that will soon begin passing through a widened Panama Canal. But such development could be years off, and the prospect for reusing the mill property itself would be complicated by the extensive environmental contamination there. The partnership should start thinking about how the plant property could be incorporated into a new vision for the peninsula, but that should remain Plan B.

Plan A is to find a new buyer. The judge handling RG Steel’s bankruptcy still must approve the sale to Hilco and its partner, Environmental Liability Transfer, and a number of the plant’s creditors, including Baltimore County, which as a $4.6 million tax lien on the property, have objected. That could buy some time. Moreover, the new owners have promised not to destroy any steelmaking assets for at least six months, which suggests that they may be open to flipping the property for a profit rather than dismantling it and selling it for parts. What’s more, Environmental Liability Transfer has a history of cleaning up contaminated properties and selling them or leasing them for reuse.

Steel firms had a chance to bid at the auction and didn’t, though there is some evidence that it might not have been for lack of interest. Representatives of the Brazilian steelmaking firm CSN spent about three weeks inspecting the plant before the auction. The company did not bid, but local and union officials say they think that had the auction not taken place so quickly, it might have. There are a handful of other domestic and international firms that could also be a good fit for the plant, and both the union and Maryland government officials — from Baltimore County Executive Kevin Kamenetz to Gov. Martin O’Malley and Sen. Barbara Mikulski — say they are determined to forge a deal with one of them.

The day may come when the 120-year tradition of steelmaking in Baltimore County can no longer be continued, but we hope that day has not yet come. It’s not just a question of sentiment or community identity but economics. Sparrows Point could one day become the home for next-generation manufacturing and industry in Maryland, but the path to that future is difficult and unsure. For now, its highest and best use — for the workers, the community and the state — remains making steel. That’s worth fighting for, even if it’s a long shot.

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